penalties. I know all about the penalties. I make $18,000 per year. I am now drawing on my line of credit to live. I have $140,000 for retirement in this IRA. I live frugally but with a mortage and the basics, and two girls in college - I am constantly short. Should I withdraw from my retirement account, pay off the mortgage ($65,000)? The reason I don't think I should leave this job is because of great benefits ($60 per month for a family) I'm divorced, also. I have also been putting into a retirement fund for 14 years. I work for a school district. I lay awake at night trying to decide what to do. Any advice for me?
2007-04-17 13:40:29 · 6 answers · asked by Anne B 4 in Business & Finance ➔ Personal Finance
THANK YOU VERY MUCH - GREAT ANSWERS!
2007-04-17 14:01:13 · update #1
Is your account a 403b? If so you may be able to borrow money from yourself and pay yourself back with interest. The plan should have a book with all the rules in it. Your plan may allow this for hardship. You have to talk with human resources , and get the information from them First. If they allow this you would not pay penalties . You do have to pay it back at some time. If you leave that job with a loan outstanding you have to pay it all back right then. But check with HR.
2007-04-17 13:56:08 · answer #1 · answered by redd headd 7 · 1⤊ 0⤋
don't pay off the mortgage - get out of the house and into something CHEAP. WIth $18k/yr income you must reduce expenses to bare minimum - or else the 401k will be empty in a few years.
When the girls grad from college and hopefully find good jobs,. you can consider getting a job that pays better since you won't need the medical benefits that much. Even so, I'd look for another job.
Retirement funds should be portable - even TSAs in schools have ways you can leave and have the value transferredinto your IRA.
Something does not make sense - did you inherit the IRA? If not, how did you amass that large an IRA - from the girld' father and the divorce? Then where are the child support payments? You did not mention that. If so, there might not be a 10% penalty on withdrawals (just income taxes).
Some facts are missing here.
ALSO - regarding withdrawals. There are no 'hardship withdrawals' or loans allowed from any IRAs. There are some small ones allowed from 401k plans and there may be some from her school generally limited to $50k..
2007-04-17 16:02:13 · answer #2 · answered by Richard of Fort Bend 5 · 1⤊ 0⤋
Yes, take the money out - With the info you have provided, it seems to be the 'best' option available. Understand that doing so raises your tax bracket, I'm no accountant, but you will pay more tax AND the penalty. So, you will need to take out $65,000 to pay off loan, an extra $6,500, for the penalty, then and extra $6,500 for the extra tax and $650 for the penalty on that. So total withdrawal would be $78,650 - again I am no accountant - so I would probably round it to $80k - which still could be a little short OR over. This (taking money out of IRA) makes sense IF, when you pay off the loan, you will then have enough money to live the way you currently live, borrowing money for day to day living makes no sense at all (you mentioned borrowing from your line of credit)- otherwise, you'll need to get a raise and/or second job. Good luck
Armando
2007-04-17 16:37:56 · answer #3 · answered by SimpleMoneyGuy 3 · 0⤊ 0⤋
Check with the place you have the IRA with. I heard that the penalties are waved if there is a financial need,paying for college,mortgages and such. I don't remember if this is for a Roth or the other one. It's your money,if you are willing to take the hit in early withdrawl penalties then do it. I would check with a financial officer at your bank for some info,like if their are other bank options and all the particulars regarding the IRA. Good luck!
2007-04-17 13:59:18 · answer #4 · answered by ? 2 · 0⤊ 1⤋
Well I'm no finacial advisor but I certainly understand living tight.I would go ahead and pay the mortage and maybe take a portion of the extra monthly income and put it back into some type of investment for those "golden" years.Just remember along with those early withdrawl fees you have to pay income tax on whatever you take out.
2007-04-17 13:56:46 · answer #5 · answered by spraymonkey001 6 · 0⤊ 1⤋
is this a shaggy dog tale? If no longer, do no longer do it. She desires to pattern the milk in the previous she buys the cow. If she isn't satisfied with the pattern the marriage might desire to be off. in case you do supply in in the previous, determine you practice a coulple of cases in the previous the vast night in case you recognize what I recommend.
2016-12-26 12:15:32 · answer #6 · answered by ? 3 · 0⤊ 0⤋